July 11, 2014

LeBron James Stole a Page Out of Louis CK's Playbook by Returning to Cleveland

Up until Friday, when LeBron James announced his epic return to Cleveland, I was probably more down on the King than the average NBA fan. For most of us, exhibit A in the list of grievances against James was his utterly tone-deaf exit from Cleveland four years ago—akin to leaving your wife for another woman, then not letting her know till she sees you hooking up with some stranger on a prime-time reality show. For me, the animus dates back much earlier. Specifically, to May 5, 2006, game six of the first-round NBA playoff series between James’s Cavaliers and my beloved (if historically futile) Washington Wizards.

The Wizards were up one point with 15 seconds to play, with their star guard Gilbert Arenas shooting two free throws that should have iced the game. Arenas, as was his wont, missed the first. At which point LeBron came over, placed his hand on Arenas’s chest, and told him, “You miss both of these free throws, y’all goin’ home.” Arenas promptly did (see full video here), and, when Cleveland hit a baseline jump shot a few seconds later, the LeBronian prophecy was fulfilled. Since then, I have cheered every time LeBron scrunched up his royal mug over the injustice of an offensive foul. I have laughed contemptuously whenever LeBron was whistled for a travel while doing his patented “crab dribble” (or, as the rest of organized basketball refers to it, “traveling”). Every losing streak or premature playoff exit has warmed my heart. I’m not proud to admit it, but I took a measure of satisfaction when LeBron doubled over in pain after breaking his nose in February.

Still, even I got a little weepy when LeBron wrote that he was returning to Cleveland after “thinking about what it would be like to raise my family in my hometown.” I mean, I have a family. I have a hometown. The King and I—we’re not really so different once you peel back a few hundred million dollars, an extra foot of altitude, a hundred pounds of brawn, and a basketball IQ bigger than most zip codes. I could even come to like this guy.

And yet here is the irony of this most noble of acts—the decision to ditch sports-mercenary-dom and become a folk hero, as The Nation’s Dave Zirin wrote in his amazingly prescient column from last year about LeBron’s inevitable return: It’s far and away the most economically lucrative thing LeBron could have cooked up.

Consider: Prior to announcing his latest decision, James was probably the most respected athlete on the planet (certainly in this country), but had a persona that millions, if not tens of millions, found somewhere between mildly annoying and downright grating. The instant he announced his return to Cleveland, he converted those skeptics into admirers. Twitter and Facebook have been abuzz with testaments to the guy's dreaminess. Post-announcement, LeBron has become both the most respected and beloved athlete on the planet. He is the most valuable commodity in all of business—the best product on the market, with a brand that makes us swoon. The financial returns to this upgrade in status—in terms of endorsement money, television rights, apparel sales, new product lines, etc.—are almost too large to fathom.

Suppose for the sake of argument that the LeBron industrial complex was generating $500 million a year as long as he was a member of the Miami Heat. (It seems like a decent ballpark estimate.) Had LeBron taken his game to a city like Los Angeles, he might have boosted the profitability of the business another 10 or 20 percent thanks to the larger fan base and media market. But it’s hard to believe he could have boosted it much more. After all, it’s not like people outside Miami haven’t heard of LeBron, or don’t have a chance to watch him on TV already. Given that his penetration, both into the market and the cultural consciousness, is nearly 100 percent, the returns to this kind of move were always going to be marginal. For that matter, they might have been a wash or even a slight negative by worsening his mercenary reputation.

The only way for LeBron to really cash in was to change the way the world saw him. To put it in political terms, “turnout” was already near 100 percent. He needed to get better at "persuasion." And nothing quite works in the persuasion business like doing The Right Thing. It wouldn't shock me if LeBron Inc. eventually doubled its revenue as a result of the move.

In recent years, LeBron’s business prowess has been compared with everyone from Michael Jordan to Warren Buffett. But this latest maneuver seems savvier than even these business icons are capable of. The analogy that comes to mind is another titan of commerce, who goes by the name of Louis CK. Back in 2011, Louie decided he was sick of relying on big entertainment companies to produce his comedy shows. He figured he’d do one himself and sell it to fans for a mere $5 a pop, with no real way to ensure people didn’t pass around pirated versions for free. As Louie explained on his website, he was almost certainly going to make “less than I would have been paid by a large company to simply perform the show and let them sell it to you.” But, he elaborated:

they would have charged you about $20 for the video. They would have given you an encrypted and regionally restricted video of limited value, and they would have owned your private information for their own use. They would have withheld international availability indefinitely. This way, you only paid $5, you can use the video any way you want, and you can watch it in Dublin, whatever the city is in Belgium, or Dubai. I got paid nice, and I still own the video (as do you). You never have to join anything, and you never have to hear from us again.

It was the ultimate menschy move, in other words, the ultimate display of respect and affection for his fans. And, as it happened, it ended up being much more profitable than any deal he could have worked out the traditional way. The fans couldn’t get enough. He cleared a million dollars within 10 days.

There’s a lesson in here, one LeBron probably grasped even if he’s never seen a Louie CK special. Persuading people you’re a good guy is really, really good for business.1

1

A reader points out that Buffett has actually employed a similar strategy throughout his career. He runs his massive investing empire from a nondescript office in Omaha, Nebraska--his home town. And he scrupulously projects a regular-guy image, from the folksy quips in his annual newsletter and investor meeting to his well-known love of simple pleasures like Coca-Cola and McDonald's hamburgers. Still, the audacity of this single act strikes me as more in line with Louie than Buffett, who built his persona more organically over the course of several decades.